Oil prices have risen remarkably during the week ending Feb. 5 as Brent reached 12-month highs on the back of the abatement of supply glut fears and despite the coronavirus pandemic pressuring global oil demand.
International benchmark Brent crude traded at $59.47 at 1152 GMT on Friday, posting a 7.4% decrease from Monday when it traded at 0654 GMT registered at $55.38 per barrel.
American benchmark West Texas Intermediate (WTI) traded at $56.78 at the same time on Friday, increasing 8.3% relative to $52.41 a barrel on Monday.
Saudi Arabia, the de-facto leader of the Organization of Petroleum Exporting Countries (OPEC) and the driver of OPEC+ production cuts, started its voluntary production cut of 1 million barrels per day (bpd) from February, which will run until the end of March.
With Saudi Arabia's voluntary reduction, the production cut of OPEC+ will reach 8.125 million bpd for February and 8.05 million bpd in March, thus reducing output in February by 925,000 bpd and 850,000 bpd in March relative to output rates in January.
“The pledge of OPEC+ to accelerate market rebalancing without delay and to remain vigilant and flexible given the uncertain market conditions is telling the market that once again the alliance will be there if needed,” said Norway-based Rystad Energy’s head of oil markets, Bjornar Tonhaugen.
Optimism over the US economic stimulus package also supported the uptick in prices.
Although President Joe Biden is still seeking to find a bipartisan agreement for a new round of COVID-19 relief aid, Democratic senators in the US Congress are now laying the groundwork to support his $1.9 trillion stimulus plan in the hope that they do not need to find a consensus with Republican voters in the Senate.
Supporting the bullish oil prices, the US crude oil inventories declined last week to their lowest level since March of last year, signaling a crude demand rebound in the US, the world's largest oil consumer.
US commercial crude oil inventories fell by 1 million barrels, or 0.2%, to 475.7 million barrels, relative to the market expectation of a build of 367,000 barrels, according to data released by the country's Energy Information Administration (EIA) on Thursday.
Another positive signal for a potential economic rebound was with the decline in the US first-time claims for unemployment benefits. The number of Americans filing first-time unemployment claims fell by 33,000 to 779,000, relative to expectations of 830,000 for the week ending Jan. 30.
By Sibel Morrow